Black RE-Friday; US RE-Dependency; EU-Commission Goes Nuclear; Apple Buy Rare Earths; Critical Materials Corner; E-Tech De-Risked?; Deposit Flipping; Bitcoin meets Rare Earths?; Ucore, DEFN, et al.
Rare Earths 2022 January 23
Chinese New Year
From January 31 through February 4 China will be closed for Spring Festival Holidays. The coming year of the Water-Tiger promises volatility, anything but a smooth sailing:
Black Friday
January 21 was a bit of a blood-letting day in the junior rare earth miner space. Most principal rare earth stocks outside China dropped substantially.
Senators Introduce Bipartisan Legislation To End US Reliance On Chinese Minerals
The U.S. Senate proposed bipartisan legislation on the 14th to require contractors in the U.S. defense industry chain to ban the purchase of rare earths from mainland China by 2026, and to require the Pentagon to establish permanent reserves for strategic minerals.
A report by the official New China News Agency (Xinhua) added:
However, the bill only applies to weapons and does not apply to other equipment procured by the U.S. military. In addition, the U.S. Trade Representative has also been asked to investigate whether Beijing is distorting the rare-earth market and recommend whether trade sanctions on the mainland are needed.
sina.com added a comment from China’s Ministry of Foreign Affairs:
In response to the so-called "concerns" of Western countries about rare earth issues, a spokesperson for the Chinese Ministry of Foreign Affairs previously stated that we live in an era of globalization, and the global industrial chain is closely linked and interlinked. In this case, it is impossible to dominate or monopolize a certain field or market, or to artificially cut off or exclude a certain chain.
We reported to you almost a year ago, that China’s foremost advocate of a rare earth boycott against the US, former editor of the nationalist Global Times Hu Xi Jin, now demoted to commentator, had to do an embarrassing climb-down and grudgingly acknowledge that a rare earth export ban to the US would likely be ineffective.
The following shows you, why.
The Case at Hand
The US do not depend on Chinese rare earths as much as they depend on Chinese rare earth magnets.
Let us seek truth from facts, and look at the kilograms:
Yes, there are also rare earth products entering the US from third countries, whose raw materials ultimately may originate in China and/or Russia. We prefer to look at the direct trade with China, as this is what matters most.
The Non-Issue
So, 5,000 t of dirt-cheap rare earths by-product at the total value of US$8.4 million are 93% of the US dependency on direct rare earth imports from China. And the prices for these can not rise on continued oversupply.
The significant drops of import quantities have two reasons: Reduced gasoline consumption and reduced combustion engine car output during COVID plus alternative supplies from non-China production.
The Small Issue
The magnet materials import quantities are such, that a single recycler such as Geomega could theoretically replace 100% of current US rare earth magnet materials imports from China.
The Big Issue
Now, what about the 5,000 t of NdFeB magnets? By rule of thumb these contain about a third of rare earth magnet materials, say 1,700 t. That is a bit more serious.
However, the main risk Congress wishes to address is “only” with the current share of the military in this. And that one is not an issue of magnets, but an issue of the components made from rare earth permanent magnets (we can’t help but notice that NdFeB exports from China to South East Asia climbed double digits in 2020, an early circumvention effort?).
In fact, rare earths and rare earth magnets are so far upstream, that China - or anyone else for that matter - would have an extremely hard time trying to determine if or not one of its exports ends up, for example, in US guided missiles.
An example for the use of NdFeB magnets in guided missiles are electric motors that moves the missile control wings:
Of course there are countless other military applications of rare earths. In fact, diving into the details you would have a hard time finding a single rare earth element that is not somehow used in some components also for military applications.
But also weapons development does not stand-still, and related the Pentagon’s requirements of rare earth products such as NdFeB magnets is set to increase.
General Atomics
One particularly rare earth and permanent magnet dependent US defense company is General Atomics (GA).
During 2017 GA acquired a stake in Rare Element Resources, the developer of the Bear Lodge rare earth deposit in Wyoming.
A clever move. Bear Lodge is described by one of the most senior western rare earth experts as the single best rare earth deposit on American soil:
Bear Lodge is good for ca. 800,000 t TREO (proven plus probable, acc. to the NI43-101). Adjacent to Bear Lodge there is a heavy rare earth xenotime deposit, according to one of the most senior western rare earth experts.
The Deadline
Did you notice the deadline 2026 in the proposed law to ban Chinese rare earths in defense products?
Ahead of that, in 18 months from now, the demonstration plant of meanwhile General Atomics’ majority-owned Rare Element Resources will come online, half financed by the Department of Energy, half by the recent capital raise of Rare Element Resources, to be fed with material from the Bear Lodge deposit.
Capex for a full-scale mine-to-oxide operation are almost a petty-cash matter for GA, however, they are likely to try and raise as much as possible from external shareholders, as they have done with the funding of their half of the demonstration plant funding.
By now you can guess, where things are headed in the US as regards rare earth supplies for Pentagon use.
But what about MP Materials, one may ask?
“The Lord Giveth, The Lord Taketh”
Not only for The Lord, but also for the Chinese Communist Party giveth and taketh is a time-honoured practise, that we have seen playing out in China’s industries over and over again, most recently in China’s internet-related sector.
MP Materials are married to their sole and single customer, China, and - as far as Mountain Pass is concerned - MP’s fate could be sealed by a stroke of a pen in Beijing. Even if MP Materials use their capital power to acquire another rare earth deposit, China will still remain MP’s major shareholder.
So, for the time being, it looks like Rare Element Resources may become the only operating all-American rare earth mine, free from foreign constraints.
Who will make the magnets?
Two principal western NdFeB magnet makers are already US-owned, Hitachi Metals and Vacuumschmelze. Question is how to keep them commercially feasible and engaged. Both have the know-how, the track record and can navigate the patent issue to manufacture NdFeB in the required quality and quantity.
Basically all the things that certain noisy newcomers making big announcements on either side of the Atlantic simply do not have.
Related: A video worthy of your every single minute:
How the Chinese dominance in the rare earths space creates a barrier for non-Chinese companies
Some of the content we disagree with.
Japan
For example Japan’s complete dependence on China for NdFeB magnet raw material, given that Lynas have about 75-80% marketshare of NdPr in Japan. Still, there wouldn’t be Japanese NdFeB magnets without China’s dysprosium and terbium. Because of these missing materials Japan’s JOGMEC cut a deal with Namibia Critical Metals.
JOGMEC and it’s predecessors have been working on reducing dependence on China since at least 1993, as far as we could find.
It seems the focus in Japan has shifted to fully replacing rare earth magnets, in view of the ongoing China-dependence.
NdFeB capacities
We disagree that the NdFeB capacities China has built and continues building up are purely geared towards domestic demand. These are far too big for that.
Evidently China refunds 100% of VAT upon export of NdFeB magnets, whereas for rare earth, where China does focus on primarily covering domestic demand, there is zero VAT refund upon export. You are welcome to buy Chinese rare earth raw materials, as long as you accept to have at least 13% higher raw material cost than an equivalent China domestic enterprise would have.
By design this trade manipulation is fully geared towards domination of the world market in NdFeB magnets.
Patents
On the Japanese patents that may have stifled NdFeB production in the US in the early 1990s, these are not valid forever. We understand that key magnet patents keep expiring.
The comparison to the pharmaceutical industry is a good one. Expiry of patents is, what generic pharmaceutical manufacturers base their business model on, attacking enormous margins of the originators. In rare earth and rare earth magnets, however, there are no such margins.
Patent lawsuits can be so big, that it may well be cheaper to close shop, rather than to fight the patent lawsuit at excruciatingly high cost for years and years.
Given the ten thousands of patents resting on rare earths and magnets, any prospective rare earth and NdFeB manufacturer must employ a battery of patent lawyers, just like the generic pharmaceutical industry does, to weed through the jungle of patents in order to identify and mitigate patent violation risks.
Can the EV Supply Chain Scale to Meet Growing Demand?
For example, Mazda will create an architecture for EV development that will reportedly accelerate the design and manufacture of future electric cars. That framework will not come out until 2025. However, one of the company’s earlier frameworks, which it intends to implement from 2022-2025, will at least create three more EV models.
Volvo has also indicated it will release one fully electric car over the next five years and aims to make electric automobiles comprise half of its sales by 2025. Relatedly, the brand wants to have one million of its electric vehicles on the roads by that same year.
These are exciting goals, but they’re virtually meaningless without the necessary supply chain support. Succeeding requires companies to iron out the supply chain challenges.
People often position electric vehicles as a critical part of managing climate change and protecting the planet. While it’s true they could be, that’s not a guarantee. An overlooked aspect of the EV supply chain is the emissions associated with manufacturing a vehicle’s 20,000-30,000 parts.
For example, EV bodies contain more aluminum than traditional cars due to the metal’s lighter weight and the need for energy efficiency. However, aluminum mining is intensive and causes significant emissions. One eye-opening analysis showed that electric vehicle owners must drive 13,500 miles before their cars do less damage to the planet than those running on gas.
We wonder, for how much longer the automotive industry and people’s obsession with individual motorised transport will escape scrutiny in terms of sustainability.
Do we really, really believe, that our lifestyle will become sustainable just by swapping our gasoline guzzlers for electric vehicles?
Related:
Electric cars: Global rush for lithium set to spark first rise in cost of EV batteries after UK climate pledge
Analysts are warning that the cost of electric car batteries is set to rise this year for the first time ever, in a reversal of the usual trend for green technology to become cheaper.
And in the longer term it could trigger an earthquake in the global car economy, leaving China as the dominant supplier of electric vehicles (EVs).
Related:
Highway Blocked In Serbia In Protest Against Lithium Mine
Hundreds of environmental activists in Serbia blocked a major highway in the capital, Belgrade, for about an hour on January 15 in the latest protest against London-based Rio Tinto's plans to develop a $2.4 billion lithium mine. The protests have been held in Serbia every Saturday since late November. The government has offered mineral resources to foreign investors, including China's Zijin copper mine and metals company Rio Tinto, as it seeks to boost economic growth. Activists say the projects will cause pollution. A cabinet decision on how to proceed is expected soon. The protests are seen as a factor ahead of April 3 national elections.
Also in distant Australia there will be general elections on or before May 21, 2022. The ruling current conservative government needs to worry, as polls show increasingly unfavourable numbers for the current government.
From the Chinese press, Apple secure raw material supplies:
In order for your iPhone to be magnetically charged, Apple spent another 500 million to buy materials
On January 11, Huahong Technology, which re-refined rare earth recycled materials, announced that its subsidiary Xintai Technology has reached a cooperation with Apple. They will provide Apple with praseodymium oxide neodymium products from next year, with a monthly rate of 50 tons. According to the current highest price of neodymium praseodymium oxide, the transaction amount is about 540 million yuan.
Xintai Technology began to communicate with Apple in October 2019, and it is only now that the cooperation has been fully finalized. The neodymium praseodymium oxide they provide can be used in magnetic materials such as MagSafe.
In fact, Apple has been preparing a more secure plan for a long time. As of the iPhone 11, the Taptic Engine, a linear motor, is 100% made from products extracted from recycled rare earths, and this motor accounts for a quarter of the total rare earth use. Apple is also the first manufacturer to use recycled rare earth materials in the main components of mobile phones.
Rare earths are non-renewable resources, and mining and smelting are strictly controlled by the state. Only Northern Rare Earth and China Rare Earth Group are qualified for mining and smelting, and they only supply contract manufacturers. One of the shareholders of Ganzhou Keli Rare Earth New Materials Co., Ltd., which Apple cooperates with, is Zhongke Sanhuan, a manufacturer of permanent magnet materials. They can purchase rare earth materials from two major rare earth groups.
Apple once thought about recycling rare earths directly from iPhones, but found that the efficiency was too low. For every 100,000 iPhones recycled, only 32 kilograms of rare earths could be extracted. Finding a third-party supplier would be a more cost-effective option.
EU Taxonomy: Commission begins expert consultations on Complementary Delegated Act covering certain nuclear and gas activities
Taking account of scientific advice and current technological progress, as well as varying transition challenges across Member States, the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future. Within the Taxonomy framework, this would mean classifying these energy sources under clear and tight conditions (for example, gas must come from renewable sources or have low emissions by 2035), in particular as they contribute to the transition to climate neutrality.
This is interesting. Nuclear power inevitably means nuclear waste from spent fuel rods.
While, on the one hand, the Commission leans to labelling nuclear energy as sustainable for an undefined transition period, on the other hand the EU soon will have burnt half a billion Euro in pointless debating clubs, endless numbers of largely ignored consultancy reports and dead-born recycling projects, all in order to avoid comparatively minuscule amounts of radioactive waste, related to potential rare earth production in the EU and its affiliates.
Thousands of tons spent nuclear fuel rods are OK, but a considerably smaller quantity of mildly radioactive waste from rare earth production are not OK?
Rare Earths Outlook 2022: REE Magnet Prices to Remain High
The demand side of the rare earths space performed largely as expected, with consumption of so-called magnet rare earths — neodymium, praseodymium, dysprosium and terbium — leading the market’s growth by volume and value, as per Adamas Intelligence.
Yes, inside China. Outside China puny.
“The MP Materials US magnet plant announcement and related offtake agreement with General Motors (NYSE:GM) was also huge news, as was the announcement of VAC's intention to do the same,” Castilloux said.
GM‘s 1,000 t NdFeB per year: It is a prudent plan and filling it with life will be very challenging. Read above. Much more interesting will be, if the MOU between GM and Vacuumschmelze will be filled with life. Vacuumschmelze have a long history to produce NdFeB magnets, MP don’t have any of that.
“The government will own 31.2 percent in the new REE group company, and the shareholders of the three companies will own the remaining interest,” Moreno explained. “How this event may ultimately affect supply, exports and prices is to be seen.”
Breathtaking expertise. We have news for Mrs Moreno: All principal rare earth companies in China are state-owned, resp. state-controlled. This common knowledge condition has always been immaterial to supply, exports and prices.
“If the global chip shortage eases next year, allowing the auto industry to return to normal, we would expect demand for all major rare earths, including lanthanum and cerium, to grow healthily,” Castilloux said. “But if chip shortages continue to hamper vehicle production, we expect demand for cerium and lanthanum to suffer in parallel.” Lanthanum and cerium are used for emissions-reduction catalysts and oil-refining catalysts.
Lanthanum and cerium are sold at prices well below their production cost. Because of their use in internal combustion engine vehicles and in petrol refining, the demand for La and Ce compounds will trend down, as EV market participation goes up - of course mostly in China.
“Although there are several projects outside China, and some are in relatively advanced stages, such as Lynas Rare Earths and Iluka Resources in Australia, the most likely source of new supply this year is still likely China,” Moreno said.
There is more going on than meets the eye.
By the way of REIA:
The raw-materials challenge: How the metals and mining sector will be at the core of enabling the energy transition
As the world gears up for net zero, demand for raw materials is set to soar. The energy transition presents unique challenges for metals and mining companies, which will need to innovate and rebuild their growth agenda.
Requirements for additional supply will come not only from relatively large-volume raw materials—for example, copper for electrification and nickel for battery EVs, which are expected to see significant demand growth beyond their current applications—but also from relatively niche commodities, such as lithium and cobalt for batteries, tellurium for solar panels, and neodymium for the permanent magnets used both in wind power generation and EVs (Exhibit 1). Some commodities—most notably, steel—will also play an enabling role across technologies requiring additional infrastructure.
Looking ahead, under a scenario in which materials are required at steadily growing levels to meet evolving needs but markets fail to adapt to varying technology mixes and materials intensities over time, hypothetical shortages of raw materials would emerge—as demand is expected to grow significantly faster than supply.
Hypothetical shortages? We sense a certain disconnect here. The shortages are here, real, present, and sky-rocketing prices puncture the nice dream of universal, affordable e-mobility.
Gaius King of Fox-Davies, who presented during “The Resilience of the Rare Earth Supply Chain” forum organised by REIA last year (see our report here), made a rather valid point, based on painstaking research, in predicting that at best the share of hybrid vehicles will increase, as for pure EV there would be simply not enough material.
As especially rare-earthlings know from experience, opinions of China’s State Council matter, as these may kickstart medium- to longterm developments, that will affect industries everywhere.
China’s State Council’s General Office issued an opinion on January 11, 2022. Content-wise it is quite similar to Several Opinions of the State Council on Promoting the Stabilisation and Improvement of Foreign Trade Guo Fa [2016] No. 27, published 5 years ago and we’d like to highlight some points of the longish document:
Opinions on making cross-cycle adjustments to further stabilise foreign trade
At present, our country's foreign trade is faced with more uncertain, unstable and unbalanced factors, and the foundation of foreign trade operation is not solid. In order to thoroughly implement the spirit of General Secretary Xi Jinping's important instructions on keeping the economy operating within a reasonable range, implement the decisions and arrangements of the CPC Central Committee and the State Council, further expand opening up, make cross-cycle adjustments, help enterprises bail out, especially support small, medium and micro foreign trade enterprises, and strive to ensure order, stabilise expectations, and promote the stable development of foreign trade. With the approval of the State Council, the following opinions are hereby offered:
The General Secretary’s important instructions were not part of the 2016 opinion. A bit of a North Korean touch this time.
1. Tapping the potential of import and export
(2) Do a good job in the import of bulk commodities. Actively safeguard the domestic supply of bulk commodities. Coordinate and ensure the stable operation of all links in the import of bulk commodities. (All local people's governments, the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Transport, the State-owned Assets Supervision and Administration Commission, the General Administration of Customs, the Bureau of Grain and Reserve, and the Bureau of Energy shall be responsible according to the division of responsibilities)
The a.m. most certainly includes rare earth raw materials.
2. Guarantee the stability and smoothness of the supply chain of the foreign trade industry chain
(6) Stabilise the development of processing trade. Strengthen the cultivation and construction of national processing trade industrial parks, deepen the cooperation and co-construction of the eastern, central and western, and northeastern regions [i.e. practically everywhere north of Yangtze River?], and encourage and support the development of key processing trade projects. Accelerate the cultivation and identification of a new batch of key undertaking sites and demonstration sites for the gradient transfer of processing trade, increase support, and play a leading role in demonstration and radiation. (The local people's governments, the Ministry of Commerce , the Ministry of Human Resources and Social Security, and the General Administration of Customs shall be responsible according to the division of responsibilities.)Temporary exemption from the collection of domestic sales tax for processing trade enterprises and deferred tax interest until the end of 2022, to stabilise the development of processing trade and reduce the burden on enterprises. (The Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation shall be responsible according to the division of responsibilities)
Processing trade used to be the import of raw material/products, adding some value through processing/assembly and re-export the finished product. A very low added-value activity. Think assembly of motorcycle carburetors.
The 2016 publication greatly reduced processing trade in China’s Free Trade Zones (processing trade in rare earth not permitted) and whatever may have been worth keeping moved to central and western China, including Xinjiang.
In this context, however, the meaning of processing trade perhaps should be different. Industries in capitalist countries came from an economic environment where they can rely on outsourcing non-core production activities to third parties, in order to be leaner and meaner by focussing on core competencies. In China none of this outsourcing potential existed and nascent industries had to do everything in-house, including non-core processing activities. This leads to inflated working capital and often underused non-core processing facilities. In order facilitate industries to become leaner and meaner, the service and processing environment of capitalist countries is being emulated.
The subsidy offered by not collecting output VAT while being able to reclaim input VAT from the tax office for a year is massive.
//Companies
E-Tech Resources Inc. Announces Listing on the Frankfurt Stock Exchange (XFRA) with Its 100% Owned Eureka Rare Earth Element Project in Namibia
E-Tech Resources Inc. (TSXV: REE) ("E-Tech or the Corporation") is pleased to announce its co-listing on the Frankfurt Stock Exchange (XFRA) under the ticker symbol "K2I". E-Tech Resources Inc. is a rare earth exploration and development company focused on developing its Eureka Rare Earths Project in Namibia.
E-Tech describe Eureka as “a uniquely derisked rare earth element project in Namibia”.
Actually, this is rare earth exploration on a shoe-string. In terms of stock investors, it is anything but de-risked.
The NI43-101, prepared by SRK ahead of a reverse merger of E-Tech with Battery Road Capital Corp. executed on October 10, 2021 says:
None of the 2020-2021 drilling has been assayed at this stage.
Based on chip samples collected since 2016 and after first trenching, the TREO is mentioned as 4.8%, but the inferred resource is only 310,000 t, i.e. at this stage of exploration 15,000 t TREO. (Samples from second trenching must wait for assaying, until the company can pay for it).
The NI43-101 of SRK, however, sets a moderately higher exploration target:
There is significant potential to increase the size of the Mineral Resource with further exploration. Based on the radiometric anomalies and mapped outcrops yet to be tested with trenching, SRK has also therefore reported an Exploration Target of between 500 and 1,500 Kt at an average grade of between 2% and 5% TREO.
500,000 t to 1,500,000 t at average grade of 2-5% means 10,000 t - 75,000 t TREO. After recovery/process losses even at the top quantity end, in our opinion, this may be too small.
Based on current data, SRK assess that more than 82% of Eureka are oversupplied and currently cheap-as-cabbage lanthanum and cerium:
We disagree with SRK, that one may add 30% to current prices for assessing commercial potential, particularly not for lanthanum and cerium, which are preliminarily assessed as >82% of Eureka potential output.
Even if the intense, well-funded Chinese research into using La and Ce as steel and aluminium alloys and/or coatings should ultimately be successful, e.g. corrosion resistant rare earth steel to replace stainless or rare earth coated steel to replace galvanised steel at a fraction of the cost, if adoption should be really, really fast, in the absence of international standards it would take more than a decade for the market to accept such alloys/coatings in downstream industries and engineering.
La and Ce are overproduced and prices are not going to turn favourable anytime soon.
We agree with SRK’s implicit assessment, that generally the hope for projects like this is to produce a concentrate and sell it to anyone who could use it.
Since also the EU and its affiliates still absurdly hope to avoid having any radioactive waste from rare earth production (hence want to “cooperate” with third countries, the more distant the better), while the US is pussyfooting around the issue and Japan made it plainly illegal to process such material, destination for Eureka’s product at this time must be China and Vietnam.
SRK add an important comment:
Designated CEO Elbert Loois is not an alien to rare earth, not a gold convert. He has been a rare earth consultant under the label of Hitech Material Advisory for many years, so he knows well what he is getting into.
An example from the other side of the Atlantic Ocean:
SEARCHLIGHT RESOURCES ACQUIRES ADDITIONAL CLAIMS AT KULYK LAKE
This company seems to be fishing for deposits of whatever metal is hot at a certain time, to see if they can pass the one or the other at profitable terms to someone else.
Expand Kulyk Lake Claims from 105.4 sq km to 317.1 sq km
That is 8 times larger than the exploration area of Eureka above.
The Kulyk Lake claim block has been expanded from 105.4 sq km to 317.1 sq km (Map 1). This block covers 38 Rare Earth, Uranium and Thorium showings. This includes the Kulyk Lake trenching, which yielded results of 45.1% TREO and 10.08% CREO over 0.6 metres, and 24.44% TREO and 5.49% CREO over 0.7 metres. (Note: TREO = Total Rare Earth Oxides and CREO = Critical Rare Earth Oxides which is the sum of Pr6O11 + Nd2O3 + Tb4O7 + Dy2O3.)
TREO of initial samples is 9 times higher than Eureka above (however, samples are usually collected from rocks of interest, not necessarily representative of the average).
According to this report Geology and evolution of pegmatite-hosted U–Th ± REE–Y–Nb mineralization, Kulyk, Eagle, and Karin Lakes region, Wollaston Domain, northern Saskatchewan, Canada: examples of the dual role of extreme fractionation and hybridization processes on Kulyk and Eagle Lake:
Radioactive minerals uraninite, monazite, xenotime, apatite, and zircon are present at higher concentrations in the hybrid border zone, are less abundant in the intermediate zone, and rare in the hybridized pegmatite cores.
According to this paper, in general REE values at Kulyk Lake are largely in the 0.0X% range:
The fly in the ointment
This particular deposit used to be Eagle Plains Resources Uranium Project, 50% of which they sold off 10 years ago to a 99 Capital Corp. In the end, they let the claim lapse, possibly for lack of third party interest. And that is, how Searchlight could stake a claim.
Meanwhile, riding the trend, also Eagle Plains got back into rare earth, announcing the acquisition of a deposit by staking a claim.
The business of model numerous companies like Eagle Plains, Searchlight, Baseload and so on is essentially flipping deposits:
In our view, there is no chance at all that any rare earth from any of these deposits will ever be produced by these companies. So the shareholder value lies in these exploration companies being able to flip their deposits at significant profit to some other explorer or a SPAC.
Bitcoin meets rare earths?
Dignity Corporation Adds $20 Billion In Precious Metals, Platinates and Rare Earth Elements In Secure Mining Claim Reserves
Senior security interest in the Patented Pinkham Lode Mine and 6,000+ sq. ft. Mill Processing facility on the 20+ acre premises, located in Mohave County, AZ. According to the current NI 43-101 evaluation the agreement will secure measured & proven mineral estimates of above ground tailings and below ground minable resource of gold, silver, platinum & rare earth elements reserves. The combined valuation is calculated to be $19.3B. Mill facilities have been restored and refurbished with new investment of $2.0MM, and a planned upgrade adding state-of-the-art metals seperation centrifuges, and techniques that are 100% eco-friendly, are programmed after the first 90-days of initial production, commencing January 2022.
Pinkham deposit has been explored and exploited for ca. 140 years for a variety of metals. It does not seem very likely, that there is a mineable resource of a value even remotely close to US$19 billion there.
Defense Metals Announces Positive Preliminary Economic Assessment For The Wicheeda Rare Earth Element Project
DEFN filed yet another NI43-101 as a preliminary economic assessment, after the first one of June 27, 2020. The latest one draws heavily on contents of the first one.
At indicated the Wicheeda deposit shows 148,000 t TREO, at inferred 539,000 t TREO. There is nothing in the measured category.
It is open pit mining with a strip ratio of 1.75, according to SRK, the authors of the report.
For the economical assessment SRK base on the following:
and
Conceptually:
Shipped overseas = Shipped to China, of course.
Quality of the finished product:
Lets look at the proportional composition according to rounded numbers of SRK’s NI43-101:
85% of Wicheeda’s TREO proportional composition are oversupplied and dirt-cheap lanthanum and cerium. As you can see from the charts on US dependency above, the price development of both has been flat to negative for years and there is no reasonable hope for any significant price recovery.
As already outlined above under E-Tech, applying a 130% model price to lanthanum and cerium we find utterly inappropriate, even if only as an academic exercise.
Whatever, the rare earth raw material prices have been sky-rocketing and therefore on the pricing/revenue side of the DEFN PEA is now somewhat within the ballpark.
This is the first economic assessment/feasibility calculation we have seen that considers China’s VAT contained in rare earth prices. Very good.
American Rare Earths builds on critical minerals vision in December quarter
Its flagship La Paz Project saw drill permits approved for the new southwest area, where there’s an exploration target estimate of between 742 and 928 million tonnes with 350 to 400 total rare earth oxides (TREO).
300 to 400 what? Potatoes? Apples? Green onions? Sloppy write-up.
Roughly 308 to 385 million tonnes of rare earth mineralised rocks were identified as an exploration target, bearing an average TREO Grade of 2330 parts per million to 2912 parts per million.
2330 ppm (0.233%) up to 2912 ppm (0.2912%) TREO? In a hard rock deposit? Wow! We can barely contain our excitement.
Loss-Making Energy Fuels Inc. (TSE:EFR) Expected To Breakeven In The Medium-Term
Energy Fuels is bordering on breakeven, according to the 3 Canadian Oil and Gas analysts. They expect the company to post a final loss in 2021, before turning a profit of US$3.6m in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 129% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
One thing we’d like to point out is that Energy Fuels has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Purify rare metals with microwaves. Joint research between QST and a startup from Osaka University
Quantum Science and Technology Research and Development Organization (QST) and Microwave Chemistry (Suita City, Osaka Prefecture), a startup from Osaka University, are conducting joint research to increase the size of technology for purifying rare metals with energy saving using microwaves.
"(This technology) can be applied not only to beryllium, but also to lithium and rare earths," said QST's group leader, Masaru Nakamichi. In future demonstration experiments, we will start with the purification of lithium.
Ucore’s long and wordy announcements are always a hard read. This time thy put a lot on their plate:
Ucore Recaps its 2021 Rare Earth Supply Chain Groundwork Accomplishments and Outlines Direction for 2022
1) Continuing financial and strategic support to IMC for their commercial development of the RapidSX™ technology platform
[Was that ever in question?]
as outlined in Ucore’s 29 December 2021 news release and summarized as follows:
a) Independent third-party expert evaluation testing of RapidSX™ technology is complete, and the independent report describing the findings is expected in January 2022.
b) RapidSX™ hardware design and the commercial demonstration plant engineering layout are complete.
c) Procurement of components and construction of the commercial demonstration plant (“Demo Plant”) are well underway.
d) The current target for the Demo Plant completion is the end of Q1-2022, with commissioning and operation during an initial test campaign to commence shortly after that.
e) IMC is performing early-stage RapidSX™ integration engineering for the Alaska SMC Project:i) Including the inclusion of prospective Alaska SMC mixed REE chemical concentrate (“MREC”) feedstocks into the planned Demo Plant testing schedule.
That will be interesting. We still wonder how the roll-out of the process to third parties can work, if the process has not been patented. According to the top management a while ago, a patent publication takes at least 18 months and month No. 18 approaching soon, so we’ll patiently continue to look out for the patent.
b) A Spring 2021 initiation of additional fieldwork exploration at Bokan to further upgrade the National Instrument 43-101 (“NI 43-101”) HREE mineral resource. The work is designed to convert a significant percentage of the currently ‘indicated’ resource to ‘measured.’ Secondly, the Company will obtain ≈50 tonnes of additional mineralized material to facilitate the above-noted testing at SGS.
The vicinity of Bokan had been mined for uranium in the 1950s and Bokan Mountain itself has been subject to exploration since 1984. Below a U.S. Bureau of Mines report of 1989:
Columbium [Niobium]- and rare-earth element-bearing deposits at Bokan Mountain, southeast Alaska
One gets the impression, as if over all those years literally no stone had been left unturned in Bokan.
However, it would still be nice to squeeze out a bit more quantity without the purely mathematical exercise of playing with the cutoff grade of originally 0.4%.
Bokan’s proportional rare earth composition is quite attractive:
According to the Preliminary Economic Assessment (PEA) of January 10, 2013, the Life of Mine (LOM) output of Bokan was assessed to be just about 20,000 t TREO after recovery and processing losses.
The Ucore PEA was based on sky-high Rare Earth Crisis prices between Oct 2009 - Oct 2012 (e.g. lanthanum oxide at US$48/kg…..now US$1.38/kg) and assessed LOM revenue as US$1 billion. Totally unrealistic at the time when the PEA was published.
However, thanks to the recent massive price increases and the comparatively low proportional content of La and Ce at 40% at Bokan-Dotson, the LOM potential revenue has now jumped to US$1.5 billion, incl. China’s 13% VAT, which US importers pay anyway when they buy from China, as China refunds no VAT upon export of rare earths.
Unfortunately, the CAPEX of 8 years ago will also have risen and a whole new feasibility assessment will become necessary.
Outstanding High-Grade Results Further Extend Primary Mineralisation at Cummins Range
“We are really excited to have picked up where we left off in 2021 with some further outstanding high-grade results which have further reinforced the potential of the primary zone at Cummins Range. The results reported in this announcement have not only extended the mineralization beyond 200m down-dip, they have also confirmed the presence of stacked mineralized zones – which bodes well for the potential to increase the tonnage as we drill the mineralization down-dip and along strike."
Given that there are several far advanced projects somewhat ready to go, the question is really what another early exploration rare earth project can offer, that others haven’t got.
//Prices
During the first couple of weeks in 2022 raw material price increases kept pushing up rare earth oxide prices.
For how much longer? For automotive the rare earth free induction motor becomes ever more attractive.
Lost in translation
A small hint to SMM: If you do a price write-up, do count the digits right:
PrNd oxide and alloy prices both recorded the yearly high at 860,000 yuan/mt and 12.5 million yuan/mt respectively in 2021.
In Chinese you count in hundreds, bǎi 百, thousands, qiān 千 - so far so good - but thereafter in ten thousands, wàn 万 and hundred millions, yì 亿. 100,000,000 would be yī yì (一亿).
As a result missing/adding a digit is a very common translation trap from Chinese to English and vice-versa. A NdPr alloy price of 125万 is 1.25 million, not 12.5 million.
As ever, these are ex works China prices incl. 13% VAT for the most common qualities of rare earth oxides/metals and their raw materials, converted at the official onshore RMB/USD exchange rate. Actual offer prices will differ.
Charts for the NdFeB and SmCo magnet materials:
That is it for today.
Thanks for reading and have a great Chinese New Year of the Tiger!
